Ethereum Faces 70% Price Drop, Community Rallies for Revival

Ethereum, the world’s second-largest cryptocurrency by market capitalization, is at a critical juncture. Once celebrated for its innovative approach and relentless focus on long-term research, Ethereum now faces significant competitive pressures and internal challenges. With Bitcoin's dominance exceeding 60% and Ethereum's price nearly 70% below its all-time high from three years ago, the Ethereum network appears to be struggling. However, its dedicated community is rallying to steer the project back on course.

David Hoffman, the founder of Bankless, explores the pivotal challenges facing Ethereum and offers insights into turning the “gargantuan ship of Ethereum” around in his article, Ethereum’s Strategic Pivot. Hoffman highlights several core issues, including underinvestment in the Layer 1, the dominance of Layer 2 narratives, and the lack of clear leadership and coordination within the Ethereum Foundation. These challenges have led to a lack of consensus and operational inefficiencies, causing Ethereum to lose market dominance and attractiveness.

Ethereum’s decentralized structure, while a strength, also makes achieving consensus difficult. The network has been slow to adapt to changing market dynamics, and the urgency to address these issues has grown within the community. Hoffman spoke with Ethereum Foundation researchers Ansgar Dietrichs and Dankrad Feist, who argue that Ethereum should refocus on scaling and improving the base layer. They advocate for a product-first approach that prioritizes user experience and adapts more quickly to the fast-paced industry.

The lack of clear leadership has resulted in a leadership vacuum, leading to a lack of direction and accountability for the network’s missteps. An “Ivory tower culture” within the Ethereum Foundation has led to insular research practices, stifling open collaboration and causing operational inefficiencies. These challenges have contributed to Ethereum’s decline in market dominance, which has sunk to a five-year low, falling below 8% as alternative blockchains attract users with lower fees and faster transactions.

Despite these challenges, Hoffman and his Bankless guests remain optimistic about Ethereum’s future. They present a series of strategic pivots to revitalize the network, including aggressive Layer 1 scaling. Plans are in place to increase gas limits tenfold over the next two years, with short-term upgrades targeting a rise from 36 million to 100 million gas by the end of 2024. The upcoming Glamsterdam hard fork aims to push this further to 300 million gas. Integrating zk-based systems (zkVMs) could eventually expand Layer 1 capacity by 100 times without compromising decentralization, turning long-term research ambitions into near-term engineering goals.

Alongside these technical upgrades, the ETH community is shifting from a protocol-first to a product-focused mindset, emphasizing user experience and developer support. Leadership and coordination are also receiving renewed attention, with the Ethereum Foundation appointing new co-executive directors, Tomasz Stańczak and Hsiao-Wei Wang, to provide stronger direction and internal cohesion. Ethereum is also working to standardize interoperability and incentivize deeper integration between Layer 1 and Layer 2 solutions, positioning itself as a service provider for L2s. Recognizing the need for greater urgency, the network is embracing shorter roadmap cycles as well.

The upcoming Pectra upgrade, scheduled for May 7, is a focal point for these changes. Pectra promises to enhance wallet features, ease transaction costs, and improve overall scalability, reviving on-chain activity and restoring confidence in the ecosystem. Industry leaders believe these improvements could be a catalyst for renewed growth, potentially driving Ethereum back toward the $3,000 mark. Further upgrades, such as PeerDAS and Fusaka, are planned to expand data availability and reduce L2 transaction costs. However, Ethereum’s ability to support a flourishing L2 ecosystem depends on continuous technical progress.

Hoffman emphasizes that the Ethereum Foundation’s renewed leadership is only part of the equation. The broader ETH community must also adapt, updating its messaging and aligning its vision with the platform’s evolving strategy. As Hoffman puts it, “Ethereum is a big tent that holds space for many different voices.” The challenge ahead is to harness that diversity and steer the ship toward a more scalable, user-friendly, and competitive future—or remain lost at sea, floundering among the waves.